Vakifbank came in slightly under expectations, with profits of TL240 million ($134 million). Yapi Kredi and Akbank came in broadly in line with expectations, with earnings of TL567 million and TL640 million respectively. Three outperformed consensus expectations: Garanti came in at TL1.01 billion, Isbank at TL809 million and Halk at TL512 million.
However, even the banks with strong numbers had to use one-off gains to get where they wanted. Garanti included proceeds from the sale of its insurance joint venture to Eureko. Isbank included TL315 million in stronger than expected dividend payments from its industrial subsidiaries. Halk Bank had a 34% increase in loan-loss recoveries.
Each bank has differing dynamics between its three sources of income: net interest income from lending, fee income from arranging, and trading income, which is largely money received from government securities. This shows that they are starting to differentiate themselves on the basis of service and focus rather than just rely on fortress balance sheets.
What is becoming clear is that each bank is under competitive pressure, with net interest margins flat and sharp rises in deposit margins. Given that banks still rely largely on deposits for their funding, as opposed to wholesale markets, this is a classic squeeze.